There are over 1000 cryptocurrencies to choose from when building a crypto portfolio. To assist you in your investment decisions, this guide will show you how to evaluate cryptocurrencies.
The topics we will briefly review are as follows:
- Value proposition
- Technology
- Developers
- Community
- Who are the competitors?
- Is it legitimate?
1- Value proposition
Perhaps the most important thing when investing in a cryptocurrency is the value proposition it offers.. For example, Bitcoin is a kind of one’s own bank used to store, send and receive money anywhere in the world with an internet connection, without a bank or other intermediary.. Its value depends on it and its decentralization. Additionally, Bitcoin’s scarcity also makes it a gold-like asset.
However, Monero, another cryptocurrency, has additional features that allow users to conduct financial transactions anonymously.. So Monero’s key value proposition is financial privacy and anonymous transactions.
Long story short, when evaluating a cryptocurrency, you should first ask yourself these questions:
“This coin’s value proposition or what is the benefit?”
“Can this also be obtained with an existing coin?”
Sooner or later, if a coin is just a clone of Bitcoin and was created just to make money
2- Technology
The technology of a cryptocurrency is as important as its value proposition, because without strong cryptography a Blockchain-based digital currency cannot function.
If a cryptocurrency has advanced cryptography that has been thoroughly tried and tested, such as Zcash for example, that bodes well for the future of that cryptocurrency.
While conducting research, a digital currency has several serious If you think there is a technical problem, it may be right to avoid it.
3 – Developers
Another important factor for the success of the cryptocurrency is undoubtedly the developers. If a cryptocurrency team has developers who have done projects on Blockchain in the past, that’s definitely a good sign for that cryptocurrency’s future. , this may result in the failure of that coin.
Therefore, it is best to look for cryptocurrencies with a reputable developer team behind them.
4- Community
It is difficult for a cryptocurrency to thrive without a community. A coin’s community members act as cheerleaders for that coin and promote it on social media asking investors to adopt it.
A digital currency is difficult to succeed without a strong community. Bitcoin and Ethereum are the cryptocurrencies with the two largest communities. Therefore, it should come as no surprise that these are the two largest cryptocurrencies by total market value.
5- Who are the competitors?
When examining a cryptocurrency you are considering investing in, it is also important to look at its competitors.. Are there other coins with similar functions?
For example, there are several digital currencies targeting the esports industry. FirstBlood (1ST), Unikoin Gold (UKG), and HeroCoin (PLAY). When investing in a cryptocurrency focused on esports, you need to find the most successful among them according to the points we have written here.. In addition to this, you should also pay attention to how an esports-oriented crypto money that will take place in the crypto money world should be.
To give another example; The same principles apply when looking at privacy-focused digital currencies like DASH, Monero, Zcash, and PIVX.. When analyzing which one to invest in, you should compare them against each other.
Which offers the best privacy, which has the best technology, and which has the most community support? These are all questions to ask yourself when doing a competitor analysis on the cryptocurrency you want to invest in.
6- Is it legitimate?
Finally, is this coin really legitimate, totally scam or not? you just have to ask yourself if it’s part of a pumping and dumping scheme.
For example, fictitious currencies OneCoin and The Billion Coin, which were sold to uninformed investors, turned out to be completely worthless.
Crypto If you are planning to invest in currencies, especially cryptocurrencies with low market caps, it is important to do a thorough research before doing so.. As cryptocurrencies continue their rally journey, they have left some winners and losers behind.. The losers were those who invested, often refraining from researching.. So the best advice for any cryptocurrency investor would be “Do your own research”.